(Adds more details from a Telefonica release.)
DOW JONES NEWSWIRES
Spanish telecommunications giant Telefonica SA (TEF, TEF.MC) has
sweetened its bid for Portugal Telecom SA's (PT, PTC.LB) indirect
stake in Vivo Participacoes SA (VIV) to EUR6.5 billion from its
previous EUR5.7 billion offer.
In a filing to the Portuguese stock market regulator, Portugal
Telecom said it received Telefonica's revised and binding bid
Tuesday.
The new proposal comes with two alternatives: one for an
immediate sale of PT's entire stake and another to be executed at
PT's sole discretion during a three-year period, the Portuguese
company said.
Under Telefonica's revised offer, should PT accept the offer,
the Spanish telecommunications company would grant PT a call option
that can be exercised by either the Portuguese company or a third
party designated by PT over PT's shares held by Telefonica.
Telefonica holds a 10% stake in PT.
A person close to the situation had told Dow Jones Newswires
earlier Tuesday that Telefonica was planning to raise its bid on
the two companies' Brasilcel joint venture to between EUR5.9
billion and EUR6.8 billion.
Telefonica had previously offered EUR5.7 billion for PT's half
of Brasilcel, a holding company that owns about 60% of Brazilian
cell phone operator Vivo, an offer which PT promptly rejected.
PT's board of directors, which met Tuesday, said Telefonica's
new offer doesn't reflect the strategic value of its asset and
resolved to call a shareholders' meeting so that PT's holders can
make a decision on the offer.
Telefonica's new bid expires June 30, but it can be extended if
PT submits it to a shareholders' meeting.
In a separate release, Telefonica said it has enough funds and
credit lines to complete the transaction and that its offer,
therefore, isn't subject to any other conditions nor further
approvals by the company.
Telefonica added that if the offer is successful, it plans to
keep Vivo's management, including its chief executive officer. It
also plans to launch a tender offer on Vivo's voting shares not
owned by the company.
Telefonica added that as part of its proposal, it's committing
to purchasing all of PT's Brazilian unit, Dedic, at a price
resulting from an independent evaluation.
The Brazilian venture is considered strategic by both Telefonica
and PT, which face stagnant revenue in mature European markets,
positioning Brazil as their main growth platform.
Brazil had a total of 179 million cellphone subscriptions in
March--equivalent to 93% of the population. That's 17% higher than
the year before.
-By Enza Tedesco, Dow Jones Newswires;
enza.tedesco@dowjones.com